Influence of the Investor’s Short-Term Horizon on IPO Performance: An Emerging Markets Perspective

The present study aimed to investigate the relationship between investor sentiment and the return on the first day of an IPO, moderated by emerging market risk factors, from 2013 to 2021. The sample included 105 companies that carried out an IPO in this period. The econometric method used was the regression analysis. As main results, it was observed that investor sentiment, measured by market variables and trading volume, positively affected returns on the first day of the IPO, even when moderated by idiosyncratic country risk factors. Thus, the research hypotheses were accepted. In addition to the debate on the influence of investor sentiment on the performance of IPOs, the theoretical contribution of the research involves the empirical expansion of the effects of country risk factors. Therefore, it was concluded that investors seek returns on the first day of the IPO, considering their sentiment towards the market and reacting positively to the risk factors of emerging markets.